The leading Liberal Democrat campaigner against secret courts resigned from the party at the rostrum of its spring conference as members voted overwhelmingly for a second time in six months to reject the justice and security bill.

Prominent party activist Jo Shaw accused Nick Clegg of a betrayal of liberal values and employing the same shoddy realpoliitik as the Blair government.

The Lords are due to look at the bill again this month and Sunday's conference vote will strengthen those peers seeking to reinstate protections thrown out by MPs, including most Liberal Democrats, last week.

The behaviour of the party's MPs was denounced as "quite simply shameful" by leading lawyer and former Cambridge Lib Dem MP David Howarth. He said: "This is not about policy or about deals: it is about who we are. This bill does nothing to help the security services to gain more information or foil more plots. All it does is give them an unfair advantage in cases where they are accused of kidnapping and torture. Again, anyone who cannot see that is fundamentally wrong and not liberal."

Addressing the Liberal Democrat leader of the Lords, Tom McNally, Howarth said: "Tom, I know the Lords can stop this bill. You know the Lords can stop this bill. They should stop this bill."

Shaw, a parliamentary candidate in 2010, described her parliamentary party's handling of the bill as "a car crash in slow motion and a textbook case of political failure".

She said the revised bill failed to meet the demands of conference or the amendments made by peers. In an emotional speech she said her party's leadership "could have put a stop to this bill at the outset and have failed. Despite principled objections from party activists from all sides, the leadership has unilaterally decided that civil liberties is not a red line issue."

She concluded: "I joined this party to campaign for my values 12 years ago. A decade ago I was proud to march with my party leaders against the Iraq war. I supported the coalition government because of the opportunities it gave us to put our Liberal Democrat values into practice.

"Today is a sad day at the end of a very sad week because I have come to the conclusion that I cannot continue to campaign to uphold the values of fairness, freedom and openness inside the Liberal Democrats under its current leadership – a leadership for whom the privilege of power has meant the betrayal of liberal values.

"The party that stood against 42-day detention, ID cards and the war on terror is led now by those who on this crucial issue employ the same shoddy logic, and have fallen into the same anti-democratic realpolitik as the Blair government. It's not me Nick, it's you."

As she resigned, Rose offered the hope the party "would finally be led by someone who would act according to liberal principle and scrap this bill".

Martin Tod, a fellow campaigner against secret courts, said: "Something has gone horribly wrong with our party if committed libertarians like Jo Shaw don't feel any longer they can remain members."

But McNally, a justice minister, indicated he was unlikely to lead a rebellion but would instead seek further concessions. He said it was to the credit of the party that it was so troubled by the issue of secret courts, but said the bill's critics lived in an Alice in Wonderland world.

He said: "if we do not have the procedures by which we can examine some of these attacks on the behaviour of our security services, then they will go unchecked, money will be paid in compensation and reputations will be damaged because there will have been no opportunity to mount a defence."

He insisted the bill returning to the Lords was dramatically different to the one set out in a green paper 18 months ago, adding: "Sometimes you come to that juxtaposition between justice and security where you have to take tough decisions like we did in Northern Ireland and in certain immigration cases.

"It's a tough decision; it is a decision you have to make when you are in government. We will make that decision."

Simon Hughes, the party's deputy leader, said there was not a parliamentary majority to get rid of the section of the bill introducing secret courts altogether, but said it might be possible to make sure the legislation was temporary, adding that the rules of the secret court should be subject to parliamentary scrutiny.

Caron Lindsay, who co-edits the Liberal Democrat Voice website, told the conference: "There are some things you just cannot polish. Our instincts must be to protect people from the excesses of the state. The bill is the embodiment of the state accruing power in the name of public good."